Australia goes global in fight against illegal tobacco

4 days ago 5

Illegal tobacco importers will face the same scrutiny as weapons and drug smugglers in a federal campaign using global intelligence sharing to curb the booming black market for cigarettes as Labor rejects calls to cut excise on cigarettes.

Police ministers agreed to make tobacco enforcement a top priority at a meeting on Thursday as the Albanese government pushes for uniform state licensing, multimillion-dollar fines for retailers and harsh penalties for criminal importers to rein in the sector fuelling gang wars and firebombings in Sydney and Melbourne.

Australian Border Force officers checking illegal cigarette imports found in shipping containers in Melbourne.

But Labor has rebuffed the argument from NSW Premier Chris Minns and some Coalition MPs that tobacco excise should be cut on the basis that its steep rise in recent years has encouraged smokers to buy illegal cigarettes, punching a huge hole in the budget.

Assistant Minister for Customs Julian Hill said the government would not “back off and will not surrender our health policy to organised crime”.

“There are tried and tested strategies law enforcement agencies use to disrupt trade in other illicit goods, be they drugs or weapons. This is a multi-pronged, multi-year, multi-jurisdiction fight.”

Federal figures released to this masthead show there has been a threefold increase in the number of cigarettes seized from four years ago, with 346,000 kilograms of illicit tobacco and more than 2 million vapes taken off the streets in the past year.

The Commonwealth is working to bring states together to pass tougher laws on penalties and enforcement, potentially mirroring South Australia’s longstanding framework that includes fines of up to $6 million for retailers.

A similar scheme in NSW began on July 1 and Victoria will start enforcing its regime from February.

Canberra has also struck enforcement partnerships with authorities in Singapore, the UAE and Thailand among other nations to stop tobacco being shipped to Australia.

While the offshore intelligence sharing has come into force, Hill said, “more is being and needs to be done post the border in partnership with the states” and newly appointed tobacco commissioner Amber Shuhyta.

“We’re rapidly deepening our partnerships with other nations around the region and beyond. The intelligence picture is improving our targeting, which is improving our seizure rate,” Hill said.

In the past two months, a man was arrested in Victoria for allegedly importing seven tonnes of tobacco; 4 million illegal cigarettes were nabbed in Operation Smokehaze in WA and NSW; and in Queensland’s Operation Waxweed, 30 million cigarettes and 40,000 vapes were seized.

The Coalition has accused Labor of moving too slowly on enforcement as organised crime has reaped huge profits off vapes and black market tobacco to fund other crimes like trafficking and cybercrime, putting at risk Australia’s world-leading tobacco controls.

Home Affairs Minister Tony Burke led a meeting of state police ministers in Canberra on Thursday where attendees discussed bringing police, border officials, intelligence, state health organisations and consumers authorities together.

Illegal tobacco sales have exploded, with packs often selling for about 80 per cent cheaper than legal cigarettes in tobacco shops and unlicensed convenience stores. Coles raised the alarm when releasing its annual results in August, revealing sales of cigarettes had dropped from $300 million four years ago to about $60 million.

The most recent data from 2022-23 showed about 20 per cent of the tobacco market was illegal, but research published in the Australian and New Zealand Journal of Public Health last month said this figure was likely a vast underestimate. This masthead reported in May that for every McDonald’s store there were 60 tobacconists.

Along with the petrol excise, which is at risk from growing use of EVs, the tobacco excise has collapsed to its lowest level in 14 years, blowing a $17.6 billion hole in the already-strained federal budget and putting more reliance on Australia’s highly taxed wage earners.

In June, Minns called for the “massive” federal excise, raised steeply by both major parties over years to discourage smoking and raise revenue, to be reconsidered. Asked if Labor was considering doing so, Hill echoed Treasurer Jim Chalmers and said it was not under consideration.

“The narrative that some are putting out, that somehow the excise on tobacco has magically caused this problem, is simply not borne out by the facts,” he said. “This problem is not unique to Australia. There are countries right across the world that have little or no excise that also have growing illicit tobacco markets.”

“What we do know from decades of health research is that price is the single most important factor in people quitting smoking or significantly cutting back on how much they smoke. The success that Australia has had over decades in driving down smoking rates has saved and extended untold numbers of Australian lives.

“No one can point to some magic level of excise reduction that would impact this problem, because the cost of production is so low and therefore profitable. So we’re not backing off on what is proven to work to drive down smoking. We need to continue to change the equation so criminals realise that there are higher costs and lower profitability for this illegal trade.”

The academic journal, published by researchers at the Cancer Council and the universities of Melbourne and NSW, said calls to reduce the excise to pre-2020 levels were “ill-informed”, claiming NSW and Victoria with weaker enforcement schemes had allowed the problem to flourish.

“Such a move would be very unlikely to address the problem of rising illicit tobacco sales as illicit products are currently being sold at much lower prices than taxed tobacco products in 2020,” the paper reads.

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